OUE Commercial REIT's OUE Bayfront in Singapore. (Photo: REITsWeek)OUE Commercial REIT's OUE Bayfront in Singapore. (Photo: REITsWeek)

OUE Commercial REIT reported on 3 November that its net property income (NPI) for 3Q 2022 has increased by 4.4% year-on-year to SGD48.3 million.

The REIT has attributed this mainly to lower property expenses.

However, taking into account lower income support for OUE Downtown Office and higher interest expense, the amount available for distribution was SGD26.2 million.

This represents a fall of 13.3% year-on-year.

To mitigate against refinancing risk, the REIT has completed early refinancing of close to SGD1 billion of secured debt in August 2022 with an unsecured SGD978 million sustainability-linked loan.

Only 12% of total debt is due for refinancing in 2023 and none in 2024, said the REIT.

“Earlier in May, we further diversified funding sources and increased financial flexibility with the issuance of SGD150 million five-year 4.2% fixed rate notes”, said Han Khim Siew, CEO of the REIT’s manager.

“With prudent asset and capital management, we remain confident in our ability to deliver sustainable returns to our unitholders”, Han added.

As at 30 September 2022, the REIT’s aggregate leverage was 40.3% with the weighted average cost of debt at 3.2% per annum.

To mitigate the impact of rising interest rates, approximately 70% of the REIT’s total debt is hedged into fixed rates.

OUE Commercial REIT was last done on the Singapore Exchange at SGD0.32, which presently implies a distribution yield of 6.75% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.